Late fees for BNPL may be less hurtful to your wallet than the late fees and interest charged by credit cards if you don’t pay off your balances at the end of the month, but it may still leave a dent. Most BNPL platforms will automatically deduct the amount you owe when the due date arrives, but if you have insufficient funds in your linked card, then you’re immediately going to owe the late fee.
So, it is extremely important to keep track of your spending, account balance and the instalment dates of all your various purchases. It might be pretty difficult to trace and remember all of them, but that’s the trade-off of being able to split your purchase payments!
Here are the late payment fees of various BNPL platforms available in Singapore (non-exhaustive)
Note that most BNPL firms will freeze your account if you owe them late fees!
BNPL is a relatively new concept and hence, not all merchants have accepted or partnered up with BNPL firms yet. Some merchants may still require you to pay by the more conventional means, i.e. debit/credit cards, bank transfers, etc. Other merchants may only have partnered with a handful of BNPL firms, meaning that for regular BNPL usage you may have to open accounts with multiple firms.
It’s called “Buy Now, Pay Later” and not “Buy Now, Pay Never”. You will eventually have to pay the entire purchase price of whatever you buy! The only difference with BNPL is that you’re splitting the price tag up so that you have more time to earn the income to pay it off, so really, it’s about convenience more than anything. If affording a certain item was a stretch before you had BNPL, there’s a high chance that you probably still can’t afford it now.
BNPL schemes can easily lead consumers into a treacherous “debt trap”, as it encourages customers to over-commit with multiple purchases and instalment plans. Citizens Advice in the US has warned that up to 40% of those who have used BNPL in the last year have had difficulty making payments. According to its findings, users are also unaware of how skipping a payment can influence their credit score, as BNPL providers have the right to share information with credit reference bureaus if necessary.
Photo by Gabrielle Henderson on Unsplash
BNPL may give you a false sense of affordability just because the initial sum you have to pay is a quarter or a fifth of the purchase price. However, you need to remember that the remainder of this purchase price will be hitting your wallet very soon! You need to factor these expenses into your future months’ or weeks’ budget.
Don’t just buy on the fly. You have to be cautious and do the calculations to make sure that your budgeting is still on track. BNPL can help with the flexibility of your expenses, but it does not remove it!
THE DANGERS OF BNPL. COMPLETED. ✅
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